As originally written via CoinLive
: (improved reading experience)
Back in 2017, the blockchain industry experienced an unprecedented interest which ended in what is often referred in financial terms as “irrational exuberance”, with a large portion of the rally led by retail-type investors flooding the market to ultimately chase prices at illogically hefty levels based on the infancy stage of the technological advancements and its implementations.
That rise was too fast too quick and eventually, in early January 2018, the bubble-like move came to an abrupt end. The question now is, what will it take for another sustainable bull run to materialize? At CoinLive, we will inspect the key missing pieces of the puzzle. In this article, we will investigate the ever-growing list of evidence that shows why a new type of investors, the institutional ones, looks set to enter the market in mass.
The two critical impediments for the ‘smart money’ to have been on the sidelines are clearly identifiable. Firstly, it has to do with custodianship, in other words, having formal mechanisms that allow the safe storage of the asset. Secondly, the regulation around the crypto market must be clarified with clearer guidance.
When it comes to the first missing piece of custodianship, the NY Times recently helped shed a light on where we are headed. The influential newspaper reported
that ICE (Intercontinental Exchange), which is the parent company behind the NY Stock Exchange (NYSE), is working confidentially in the implementation of swap contracts for banks and large investors that will be settled with the physical delivery of Bitcoin.
For ICE to even consider this idea it means that the problem of legal custodianship is being worked out so that the backing and security of Bitcoins by the NYSE will be in place. This will open the floodgates to a whole new market, where the King of cryptos and other digital assets down the road become available to a much wider and more influential customer base. We are certainly at a stage where institutions have recognized that Bitcoin is “too big to ignore”.
What’s also important is that by using a swap contract, the trading of Bitcoins will be oversight under the existing regulatory framework of the Commodity Futures Trading Commission, hence less regulatory uncertainty.
As a reminder, the CFTC is headed by J. Christopher Giancarlo, who is a proclaimed pro-blockchain endorser after his popular appearance in front of a U.S. Senate hearing on blockchain technology last February, where he famously said: “We owe it to this generation to respect their interest in this new technology.”
Moreover, earlier this year, Boston-based State Street, the world’s second-largest custody bank with around £24tn in assets under custody and administration, came out to announce that safeguarding clients' digital assets could be a service they are looking to provide a solution in the near future. If confirmed, it would represent a major move as it sets a precedent as the first global bank to provide custodianship services for crypto-related investments.
While Bitcoin is not serving its initially intended purpose as a widely used method of payments (for now), it has found another appeal as a store of value that is uncorrelated to any other asset class, hence it has an exceptional use as a hedging strategy for multi-billion dollar portfolios to help reduce the overall volatility.
Other stories strengthening the notion of institutional capital set to come into the cryptoverse include the news that Goldman Sachs will be trading futures contracts linked to Bitcoin’s price as an initial step, only to gradually transition into a more direct trading of buying and selling actual Bitcoins.
Find our recent article where we explain why Goldman Sachs trading Bitcoin is such a big deal
Even the chief executive of Nasdaq, Adena Friedman, recently said considerations were being given to set up a virtual-currency exchange should the needed regulatory framework be resolved.
Additionally, we have seen a growing trend of senior-level executives at institutional firms flocking off the safety of their well-established positions to venture into blockchain-related jobs. We include a few articles with evidence below: Goldman Sachs Executives are Moving to Cryptocurrency Hedge Funds Mike Novogratz Makes Goldman VP the COO of His Crypto Company Coinbase Hires Ex-Barclays Director to Expand Its Institutional Client Base Commonwealth Bank CFO to Lead Block.one as President and COO
The migration in job positions from traditional financial markets into blockchain comes as no surprise and quite frankly, it appears to be a logical and rational step to be taken, especially in light of the new revenue streams the blockchain sector has to offer.
Proof of that is the fact that Binance, a crypto exchange with around 200 employees and less than 1 year of operations has overcome Deutsche Bank, which has more than 100,000 employees and over 150 years of history, in total profits. What this communicates is that the opportunities to grow an institution’s revenue stream is formidable once they decide to integrate cryptocurrencies into their business models.
Another piece of the puzzle, even if occurring behind closed doors, is the consideration to launch a Bitcoin ETF. Back in April, it was reported that the US Securities and Exchange Commission (SEC) has put back on the table two Bitcoin ETF proposals, according to public documents. The agency is under formal proceedings to approve a rule change that would allow NYSE Arca to list two exchange-traded funds (ETFs) proposed by fund provider ProShares.
The introduction of an ETF would make Bitcoin available to a much wider share of market participants, with the ability to directly buy the asset at the click of a button, essentially simplifying the current complexity that involves having to deal with all the cumbersome steps currently in place.
More evidence of the emergence of institutions playing a more dominant role in the blockchain industry is the unprecedented interest to amass Bitcoins in the OTC (Over the Counter Market). We perceive this trend as directly linked store Bitcoin as a store of value. This article by Bloomberg should give you a taste of what's happening behind the scenes: The Wealthy Are Hoarding $10 Billion of Bitcoin in Bunkers.
As ConLive recently tweeted: "Our network of Insiders telling us between 5000-10.000 BTC are being sold every week OTC by Chinese BTC miners to Israeli buyers - Wall Street type - as they look to accumulate a big hand in BTC. “ !(https://coinlive.io/ckeditor_assets/pictures/868/content_2018-05-15_0957.png)
Lastly, one of the most critical missing piece is the subject of global regulations. Back in March, Mark Carney, the head of Bank of England and the chief of the Financial Stability Board of G20 stated that “crypto-assets do not pose risks to global financial stability at this time.” That caused a temporary relief in the crypto sphere as the risk of a regulatory backlash was removed for the time being until July, the month when more clarity will be provided.
The chair of the Argentina Central Bank, Federico Sturzenegger, on his role of sitting the G20 summit, said that members showed a unifying view on the need of cryptocurrencies to be supported by a more sound regulatory framework. The policy-maker, however, made it clear that they first need to examine the cryptocurrencies universe to gather the necessary data before proposing regulations.
“In July we have to offer very concrete, very specific recommendations on, not ‘what do we regulate?’ but ‘what is the data we need?” Sturzenegger said.
To sum up, the improvements in custodianship solutions, along with more clarity by the G20 committee, which is set to provide less uncertainty for institutional investors’ involvement, is a recipe for a renewed bull wave, this time of institutional capital, to shake up the crypto space.
At CoinLive, we will not venture into the timing, as that is quite irresponsible trying to pretend we have a "crystal ball" to determine when moves will occur. We just simply look at the big picture and try to connect the dots by first breaking down the latest developments to then draw some conclusions. Never forget, markets should always be approached as a numbers' game, and while nothing is certain, we just attempt to envision and inform on scenarios with the highest likelihood.
November 2013 saw bitcoin rise to an awesome $1,200 per, courtesy of a favorable hearing by the US Senate. During the hearing, the Senate tacitly gave bitcoin a “stamp of approval”, with even China cautiously piling on. Of course, the $1,200 pales in comparison to what we have now, but it was a huge deal at the time. Unfortunately, China ... Bitcoin USD price, real-time (live) charts, bitcoin news and videos. Learn about BTC value, bitcoin cryptocurrency, crypto trading, and more. Bitcoin price rose above $ 6 thousand 700 after this news from the Senate. Binance CEO Changpeng Zhao thinks that BTC can go much higher. 100 thousand dollars possible The US Central Bank has injected trillions of dollars into the economy in the past few weeks and cut interest rates. Now, an incentive package of 2 trillion dollars has been released from the US Senate to support the economy ... Bitcoin is expensive and it’s a bad idea. Just recently, one of the blockchain’s most vocal critics – Nouriel Roubini, an economics professor at New York University Stern School of Business – testified against blockchain technology at a US Senate hearing. His argument was that the technology is just pointless, it’s too slow and too ... US Senate Schedules Another Hearing on Crypto Assets. Blockchain News. By E-Crypto News Staff On Jul 24, 2019. 0. Share. Want email newsletter? Third party services may advertise Spread bets and CFDs on Cryptovest, which are complex instruments and come with a high risk of losing money rapidly due to leverage. 81% of retail investor accounts lose money when spread betting or trading CFDs. You ... Binance.US is scheduled to open up for registrations and deposits on September 18, and trading will commence soon after that, although the time of trading commencement has not been disclosed yet. Binance.US looks to be far more limited than regular Binance, with only Bitcoin, Ethereum, Ripple, Bitcoin Cash, Litecoin, and Tether trading available to start. Further, Binance.US will require ... The US Senate House Committee on Banking, Housing, and Urban Affairs began its meeting specifically about cryptocurrencies at 10 AM EST on 30th July 2019. The title of the hearing was – Examining Regulatory Frameworks for Digital Currencies and Blockchain. The Chairman of the Committee, Mr. Crapo, conducted the meeting. The three panelists were split Senate Asks if SEC and CFTC Are Able to Handle Challenge of Bitcoin. Gaveling in the hearing at about 5 minutes after 10am EST, committee Chair Senator Mike Crapo noted the giant gains in bitcoin’s valuation in just one year. He also detailed the negative news of late, from hacks to prosecutions, but then urged a positive outlook on the ... The US Senate has recently listened to ‘Dr. Doom’ Nouriel Roubini, who’s a well-known cryptocurrency skeptic, and to Peter Van Valkenburgh, director of research at CoinCenter and well-known cryptocurrency proponent. Dr. Doom Nouriel Roubini kicked off the hearing. Bitcoin Price Skyrockets as Senate Hearing Concludes . Nov 19, 2013 at 16:20 UTC Updated Jan 11, 2014 at 09:44 UTC. Richard Boase. Bitcoin Price Skyrockets as Senate Hearing Concludes. The price ...
Visit LEDN to check out getting a bitcoin-backed loan! https://platform.ledn.io/join/0a00cca3dd61dea5909c95cd41f41685 CALGARY BTC Basics Class https://www.ev... Subscribe for daily crypto videos : https://goo.gl/zm1G9x Bitcoin will be the new store of value and crypto will be the new technology evolution and I want to be a part of that trough this channel. Bakkt Says It’s ‘Cleared to Launch’ Bitcoin Futures Next Month. Goldman Sachs Analysts Say that It’s Time to Buy Bitcoin. Binance Removes US Resident Ban Plans US Launch in "a Month or Two ... The US Senate Committee on Banking met today with the Chairman of the SEC and CFTC to discuss virtual currencies & blockchain and how to proceed further with regulation regulation. CONCLUSION: SEC ... The Senate held a hearing with the CFTC and the SEC and the result were quite positive. Listen as I break down the main points covered. Get a great range of the hottest coins on Binance! #Bitcoin is showing a beautiful pattern ready to breakout and is ready to rocket off to the MOON! We talk Binance coin goodness and why it was our pick for the year, & how it's performing almost 6 ... An Israeli Blockchain Startup Claims They’ve Invented an ‘Undo’ Button for Bitcoin Transactions. Digital Dollars Take Center Stage in Hearing Before US Senate.